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People & Points
Print Edition> People & Points
UPDATED: March 19, 2007 NO.12 MAR.22, 2007
The Trillion Dollar Man
The 56-year-old Lou, who served as vice minister of finance between April 1998 and this March, is widely regarded as a high-ranking scholar-official specializing in finance and economics

When a group of high-ranking finance officials confirmed earlier this month that the Chinese Government would set up an investment arm to properly handle the country's staggering volume of foreign exchange reserves, Lou Jiwei, the newly appointed Vice Secretary-General of the State Council, China's cabinet, proved a popular choice to lead the new agency.

The 56-year-old Lou, who served as vice minister of finance between April 1998 and this March, is widely regarded as a high-ranking scholar-official specializing in finance and economics.

According to Finance Minister Jin Renqing, the incoming state investment agency is expected to be modeled after Temasek Holdings owned by the Singaporean Government. Over the years, Temasek has made strategic investments in a number of local and foreign companies.

Figures released by the People's Bank of China, the central bank that oversees China's foreign exchange reserves, indicated a necessity to diversify its investment and disperse rising inflows of trade surplus. By the end of 2006, its total stockpiles reportedly hit $1.07 trillion, the world's largest.

Previously, an overwhelmingly majority of China's foreign exchange reserves were used to buy U.S. Treasury bonds, making China the second largest world creditor of the U.S. Government. However, as the yuan keeps strengthening, it causes increasing losses to China.

During this year's full session of the National People's Congress, China's top legislature, Premier Wen Jiabao addressed the issue in his government work report, saying that China will "actively explore and develop channels and means for appropriate use of state foreign exchange reserves."

Authoritative sources said that Lou's agency would buy the reserves from the central bank via the issuance of yuan-denominated bonds estimated at $200-250 billion, a move to transfer this portion of money for more profitable investments.

The major concern would be how Lou will manage the huge funds to best maintain China's GDP growth, curb the excessive trade surplus increase, ease currency appreciation pressure, as well as improve investment returns. It is initially agreed that such strategic projects focus on energy resources, hi-tech development, coal and oil industries that could possibly be the best choices for China's mammoth currency reserves.

"China's new investment company should focus more on securing strategic resources and technology, not solely on financial markets."

Zhong Wei, Director of Finance Research Center of Beijing Normal University, suggesting China's future forex investment plan

"Luo is a very capable person who'd played a very active role spearheading reforms in China's financial service industry."

Yu Yongding, an adviser to the central bank, who specializes in monetary policies

"U.S. traders are wise and we have no grounds for suspicion."

Chinese Minister of Commerce Bo Xilai, criticizing some U.S. lawmakers' proposal for a 27.5 percent increase in import tariff on Chinese goods at a March 12 press conference in Beijing

"Serving France, and serving peace, is what I have committed my whole life to."

French President Jacques Chirac, saying he would find new ways to serve his country after leaving office in a televised address on March 11

"It's not good for the rich world, and particularly not good for Europe, to have so many people in Africa living in misery and trying to flee here, even potentially becoming a breeding ground for terrorists."

World Bank President Paul Wolfowitz, urging developed nations to increase aid to Africa or risk the continent turning into a "breeding ground for terrorists" in a March 9 interview in Congo

"The train is great for us, and for the local population it is beneficial."

Luosang Caiwang, head of Saikang Travel in Lhasa, quoted by an AFP report on March 11 as saying that Tibet's economy and society in general have benefited from the opening of the railway linking the former remote region to China's wealthy and developed eastern seaboard

"The trip cleared the air. It created a positive environment for our future relationship."

International Atomic Energy Agency Director General Mohamed ElBaradei, expressing optimism toward the implementation of the February agreement of the six-party talks on the Korean nuclear issue after visiting Pyongyang on March 13-14

"Workers are abused fairly systematically. This is not a question of bad employers. It's built into the structure of the program."

Mary Bauer, Director of the Immigrant Justice Project for the Alabama-based Southern Poverty Law Center, accusing the U.S. "guest" worker program of nullifying worker rights

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